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Now that the Sept. 11 USDA World Agricultural Supply and Demand Estimates (WASDE) report is history, the trade is turning its attention to the fall harvest.

For soybeans, the USDA lowered its carryout estimate in the report, and that provided some support for the market.

“The big factor there is the soybeans,” says Karl Setzer of Agrivisor. “That really is a friendly number. The carryout shows a pretty sizable drop.”

But Setzer says that even with the drop, there are plenty of soybeans and the stocks-to-use ratio is still strong. That’s why soybeans are in the $9.25 range instead of in the $10.25 or $11.25 range.

“The wild card with soybeans is exports,” Setzer says.

The current estimate from the USDA is that the United States will export 2.13 billion bushels of beans in the 2020-21 crop year. That compares to 1.68 billion bushels in the just finished crop year.

“I still think that’s a little bit optimistic,” Setzer says, adding that the market appears to be betting that China will keep up its recent surge in imports from the U.S., something that may happen but which is no sure thing.

“We are still in a trade war with China,” he says.

And he adds that the trade will be watching to see what happens when China has met its needs through January because at that point it could get its beans from South America.

Things are quieter on the corn side of the ledger, where the USDA report held few surprises and ending stocks estimates are still going up despite crop damage from the August windstorm that ripped through parts of Iowa and Illinois. Setzer says the corn market is stuck in a trading range right now.

Two things to take into consideration are basis and carry. The soybean market has virtually no carry while the corn market has a 20 cent carry between now and July. Of course, having a carry in the corn market may not be a big comfort to farmers who lost grain bins and are dealing with crop quality issues. And storm damage could mean there will be a large amount of volatility when it comes to basis this fall.

This article originally ran on agupdate.com.

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